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InsiderOnline Blog: August 2011

Expanding Coverage Bends the Cost Curve Upward!

Surprise! A study published in Health Affairs projects that health care spending will go up as a result of ObamaCare. From the conclusion:

Average annual growth in national health spending is expected to be 0.1 percentage point higher (5.8 percent) under current law compared to projected average growth prior to the passage of the Affordable Care Act (5.7 percent) for 2010 through 2020. Simultaneously, by 2020, nearly thirty million Americans are expected to gain health insurance coverage as a result of the Affordable Care Act.

The largest impact on the growth of health spending is expected to occur in 2014, when the major coverage expansions begin. There is projected to be a proportionately larger impact on physician and clinical services and on prescription drug spending growth relative to other services and goods, as those who gain coverage are likely to be relatively young and healthy and to use less intensive care than the populations currently enrolled in Medicaid and private health insurance.

Combined with the entry of the baby boomers into Medicare and Medicaid, the impact of the Affordable Care Act—stemming from the expansion of Medicaid, subsidies associated with exchanges, and administrative costs associated with implementing and operating the various provisions—is projected to increase federal, state, and local governments’ estimated share of total health spending to near 50 percent in 2020. [Emphasis added.]

The article estimates that annual growth reaches 8.3 percent in 2014 when Obamacare really kicks in. Here’s some detail on growth rates.

For all the details, see: National Health Spending Projections Through 2020: Economic Recovery And Reform Drive Faster Spending Growth, Health Affairs, August 2011. [h/t: Bad News for Obamacare, John Goodman’s Health Policy Blog.]

Posted on 08/05/11 02:04 PM by Alex Adrianson

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